Compliance Question of the Week 2019
When will it be mandatory to use the new Uniform Residential Loan Application (URLA) and what are some of the changes?
Originations commencing July 1, 2019 may use the redesigned URLA and all new loan applications commencing February 1, 2020 must use the new URLA. Given that the new URLA was designed to make it easier for lenders to acquire data required by HMDA, it is expected that lenders will require use of the new URLA before the mandatory implementation date in February 2020.
The application has more than doubled in size. The length of the new URLA will vary depending on the number of borrowers, type of loan and type of the transaction (sections are added or deleted based on loan scenarios). The look and feel of the redesigned URLA is similar to the Loan Estimate and Closing Disclosure and contains what is considered more easily understood language and clearer instructions. The GSEs also created a Spanish version of the new URLA form. However, a completed English URLA must be signed by all applicants.
A few highlights of the new URLA are as follows:
- New fields have been added based on new federal regulations. For example, there are correct fields for the new demographic information required by HMDA since January of 2018 thereby retiring the Demographic Information Addendum currently utilized.
- Obsolete fields have been eliminated. For example, the applicant is no longer required to list the make and model of their automobile.
- There is defined separation of individual borrower applications.
- The information a borrower must provide, acknowledge and agree to has been separated from the information the broker/lender collects and verifies in connection with the processing and underwriting of the loan.
The redesigned URLA, as well as some FAQs and hints, can be found on the Fannie Mae website here: https://www.fanniemae.com/singlefamily/uniform-residential-loan-application
The new URLA is a complete reinvention of the origination of a loan. Brokers and lenders will need to start collecting much more information, which was not previously collected. It is advisable to review the new URLA and start planning how you will collect that data once required.